On the plus side, Colorado voters rejected an effort to replace the flat tax with a discriminatory system (in order to waste even more money on government schools), California voters sensibly stopped the spread of rent control, Washington voters rejected a carbon tax, Florida voters expanded supermajority requirements for tax increases, and voters in several states legalized marijuana.

On the minus side, voters in four states opted to expand the bankrupt Medicaid program, Arizona voters sided with teacher unions over children and said no to expanded school choice, and voters in two states increased the minimum wage.

Fourth, Illinois is about to accelerate in the wrong direction. Based on what happened last night, it’s quite likely that the state’s flat tax will be replaced by a class-warfare-based system. In other words, the one bright spot in a dark fiscal climate will be extinguished.

This will accelerate the out-migration of investors, entrepreneurs, and businesses, which is not good news for a state that is perceived to be most likely to suffer a fiscal collapse. It’s just a matter of time before the Land of Lincoln becomes the land of bankruptcy.

Interesting, deep-blue Connecticut voters elected a Republican governor. Given the state’s horrific status, I suspect this won’t make a difference.

Fifth, Obama was a non-factor. Democrats lost almost every race where he campaigned.

Though I should point out that he deserves credit for trying to have an impact in close races. Many top-level politicians, looking to have a good “batting average,” only offer help to campaigns that are likely to prevail.

That being said, this adds to my hypothesis that Obama was basically an inconsequential president.

Needless to say, I didn’t expect any positive reforms while Obama was in the White House.

Instead, I proselytized for fiscal sanity in hopes that the GOP might be willing to fix our fiscal mess if they had total control of the White House and Congress after the 2016 election.

And it seemed like things were moving in the right direction.

After they took power in 2010, House Republicans repeatedly voted for budget resolutions that included meaningful changes to Medicaid, Medicare, and Obamacare, as well as reductions in wasteful pork-barrel spending. And after the 2014 GOP landslide, Senate Republicans also voted for a budget resolution that assumed good reform.

That may be true in some alternative universe, but that’s definitely not the case in Washington.

As I warned before the election, President Trump is a big-government Republican. And a majority of congressional GOPers, after years of chest beating about the importance of spending restraint, suddenly have decided that the swamp is really a hot tub.

In 2017, my main gripe was that Republicans committed a sin of omission. They had power and didn’t adopt good reforms.

In 2018, they shifted to a sin of commission, voting to bust the spending caps as part of an orgy of new spending.

And guess what they want to do for an encore?

In the ultimate add-insult-to-injury gesture, Republicans (at least the ones in the House) are hoping voters will overlook their profligacy because they’re going to have a symbolic vote on a poorly drafted version of a balanced budget amendment.

The House is slated to vote next week on a balanced budget amendment to the Constitution… The decision to bring the measure — which would require Congress not to spend more than it brings in — to the floor comes just weeks after the passage of a $1.3 trillion spending package that is projected to add billions to the deficit. …The measure has virtually no chance of becoming law as it would need Democratic support in the Senate and ratification from the majority of states.

This is insulting.

These clowns vote to expand the burden of spending and now they want to hoodwink voters with a sham vote for something that has no chance of happening (an amendment requires two-thirds support from both the House and Senate, and then would require ratification from three-fourths of state legislatures).

Do they really think we’re that stupid?!?

To make matters worse, they’re not even proposing a good version of an amendment. Here’s the core provision of H.J. Res 2.

Section 1. Total outlays for any fiscal year shall not exceed total receipts for that fiscal year, unless three-fifths of the whole number of each House of Congress shall provide by law for a specific excess of outlays over receipts by a rollcall vote.

Sound reasonable and innocuous, but I’ve been telling folks on Capitol Hill this is the wrong approach. I pointed out that 49 out of 50 states have some form of balanced budget requirement, yet that doesn’t stop states such as Illinois, California, and New Jersey from over-taxing and over-spending, or from accumulating more debt.

I also explained that the so-called Maastricht rules in the European Union operate in a similar fashion, yet that hasn’t stopped nations such as Greece, France, and Italy from over-taxing and over-spending, or from accumulating more debt.

The problem, I explained, is that anti-deficit rules simply give politicians an excuse to raise taxes (which leads to more spending and more red ink, but I don’t think that causes many sleepless nights for elected officials).

A spending cap is far superior to a balanced-budget rule for two reasons.

A spending cap puts the focus on the real problem of excessive growth of government. And if you impose some sort of cap that complies with the Golden Rule, you simultaneously address the real problem of too much spending and the symptom of red ink.

A spending cap is much easier to enforce since politicians know that spending can only increase each year by, say 2 percent. A balanced-budget rule, by contrast, is inherently unstable and unworkable because annual revenues can jump or fall significantly depending on economic conditions.

At the risk of stating the obvious, Republican politicians are behaving in a despicable fashion.

So you can understand my caustic and frustrated responses in this recent interview with Charles Payne. I’m upset because it’s quite likely that Trump’s spending splurge eventually is going to lead to higher taxes.

Ever since there was a deal to bust the budget caps back in February, I knew it was just a matter of time before Congress and the White House responded with an odious orgy of new spending.

Some people told me I was being too pessimistic.

After all, the President’s Office of Management and Budget has a big banner on the budget webpage. It boldly states that President Trump is going to “reverse the trend of rising government spending.”

But I’ve learned to discount the rhetoric of politicians. It’s more important to look at the actual budget numbers in legislation that the President signs into law.

And that’s what Trump did yesterday, giving his approval to a bill that funds the parts of the budget included in annual appropriations.

So did he “reverse the trend”?

The good news is that the answer is yes. But the bad news is that he reversed the trend by increasing spending faster than Obama.

I’m not joking. Courtesy of the Committee for a Responsible Budget, here are the year-over-year numbers for various parts of the bill.* This table tells you everything you need to know about the grotesque recklessness of Washington.

An overall increase of 12.9 percent!

But maybe spending is climbing so rapidly because the cost of living has suddenly jumped?

Nope, that’s not an excuse. The CRFB put together a list of the major inflation projections. As you can see, there’s not the slightest sign of a spike in prices in either 2018 or 2019.

Indeed, it turns out that the Republican Congress and the Republican President decided to increase spending six times faster than needed to keep pace with inflation. Six times.

Yes, we can definitely say the spending trend has been reversed. Just not in a good way.

So who should be blamed, congressional Republicans or Trump?

The simple answer is both.

Trump is responsible because he could veto budget-busting bills. All he would need to do is tell the crowd on Capitol Hill that he is perfectly happy to close down the non-essential parts of the federal government until he gets some responsible legislation. Sooner or later, the pro-spending crowd would have to cave.

That being said, congressional GOPers also deserve blame. It’s a failure by the Republicans on the Appropriations Committee who are motivated by a desire to spend the maximum amount of money. It’s a failure of GOP leadership for not removing members from that Committee if they don’t agree to some level of spending restraint. It’s also a failure of leadership that they don’t get conservatives and moderates in a room and hammer out a common approach that would restrain the growth of Leviathan. And it’s a failure of the individual Senators and Representatives for not upholding the Constitution and not doing what’s right for the country.

But this also brings me back to Trump. If the President credibly drew a line in the sand and said “I’ll veto any spending bill that is over X”, that would change behavior on Capitol Hill. But Members of Congress believe (correctly, it seems) that Trump has no interest in fiscal restraint. So without any leadership from the White House, you get an every-man-for-himself, grab-as-much-pork-as-you-can attitude among lawmakers that makes it virtually impossible for leadership to pursue an effective strategy.

The net result is that politicians win, the special interests win, and the bureaucracy wins.

And who loses? Well, look in the mirror for the answer.

*The data in the CRFB table is for “budget authority” rather than “budget outlays.” These are closely related concepts, but technically different. When Congress approves “budget authority,” it is basically giving money to an agency. When the agencies then spend the money, it is “budget outlays.”

P.S. I’m a big fan of spending caps, but I confess that they aren’t very helpful if politicians simply change the law whenever they want more spending. The ultimate answer is to have constitutional spending limits, like Switzerland and Hong Kong, but amending the Constitution is hardly as easy task. So my best guess is that we’ll become Greece at some point.

While I realize there’s zero hope of ripping up America’s awful tax code and getting a simple and fair flat tax, I’m nonetheless hopeful that there will be some meaningful incremental changes as part of the current effort to achieve some sort of tax reform.

All that sounds good, and a package like this should be feasible since Republicans control both Congress and the White House (especially now that the BAT is off the table), but I warn in this interview that there are lots of big obstacles that could cause tax reform to become a disaster akin to the Obamacare repeal effort.

Here’s my list of conflicts that need to be solved in order to get some sort of plan through Congress and on to the President’s desk.

Tax cut or revenue neutrality – Budget rules basically require that tax cuts expire after 10 years. To avoid this outcome (which would undermine the pro-growth impact of any reforms), many lawmakers want a revenue-neutral package that could be permanent. But that means coming up with tax increases to offset tax cuts. That’s okay if undesirable tax preferences are being eliminated to produce more revenue, but defenders of those loopholes will then lobby against the plan.

Big business vs small business – Everyone agrees that America’s high corporate tax rate is bad news for competitiveness and should be reduced. The vast majority of small businesses, however, pay taxes through “Schedule C” of the individual income tax, so they want lower personal rates to match lower corporate rates. That’s a good idea, of course, but would have major revenue implications and complicate the effort to achieve revenue neutrality.

Middle class tax relief – The main focus of the tax plan is boosting growth and competitiveness by reducing the burden on businesses and investment. That’s laudable, but critics will say “the rich” will get most of the tax relief. And even though the rich already pay most of the taxes and even though the rest of us will benefit from faster growth, Republicans are sensitive to that line of attack. So they will want to include some sort of provision designed for the middle class, but that will have major revenue implications and complicate the effort to achieve revenue neutrality.

There’s another complicating factor. At the risk of understatement, President Trump generates controversy. And this means he doesn’t have much power to use the bully pulpit.

Though I point out in this interview that this doesn’t necessarily cripple tax reform since the President’s most important role is to simply sign the legislation.

To be blunt, Republicans are heading in the wrong direction on fiscal policy. They have full control of the executive and legislative branches, but instead of using their power to promote Reaganomics, it looks like we’re getting a reincarnation of the big-government Bush years.

Republicans are debating whether parts of their tax-reform package should be retroactive in order to boost the economy by quickly putting more money in people’s wallets.

That is nonsense. Just as giving people a check and calling it “stimulus” didn’t help the economy under Obama, giving people a check and calling it a tax cut won’t help the economy under Trump.

Tax cuts boost growth when they reduce the marginal tax rate on productive behavior such as work, saving, investment, or entrepreneurship. When that happens, people have an incentive to generate more income. And that leads to more national income, a.k.a., economic growth.

Borrowing money from the economy’s left pocket and then stuffing checks (oops, I mean retroactive tax cuts) in the economy’s right pocket, by contrast, simply reallocates national income.

Republicans have taken steps in the past to ensure that taxpayers directly felt the benefits of tax cuts. As part of the 2001 tax cuts enacted by President George W. Bush, taxpayers received rebate checks.

The article does include some analysis from people who understand that retroactive tax cuts aren’t economically beneficial.

…there are also drawbacks to making tax changes retroactive. …such changes would add to the cost of the bill, but would not be an effective way to encourage new spending and investments. “It has all of the costs of the tax cuts but none of the economic benefits,” said Committee for a Responsible Federal Budget President Maya MacGuineas, who added that “you don’t make investments in the rear-view mirror.”

I’m not always on the same side as Maya, but she’s right on this issue. You can’t encourage people to generate more income in the past. If you want more growth, you have to reduce marginal tax rates on future activity.

By the way, I’m not arguing that there is no political benefit to retroactive tax cuts. If Republicans simply stated that they were going to send rebate checks to curry favor with voters, I’d roll my eyes and shrug my shoulders.

But when they make Keynesian arguments to justify such a policy, I can’t help but get upset about the economic illiteracy.

Politico has a report on a potential budget deal where everyone wins…except taxpayers.

The White House is pushing a deal on Capitol Hill to head off a government shutdown that would lift strict spending caps long opposed by Democrats in exchange for money for President Donald Trump’s border wall with Mexico, multiple sources said.

Instead, the back-room negotiations are leading to more spending for all interest groups.

Marc Short, the White House’s director of legislative affairs, …also lobbied for a big budget increase for the Pentagon, another priority for Trump. …The White House is offering Democrats more funding for their own pet projects.

The only good news is that Democrats are so upset about the symbolism of the fence that they may not go for the deal.

Democrats show no sign of yielding on the issue. They have already blocked the project once.

Unfortunately, I expect this is just posturing. When the dust settles, I expect the desire for more spending (from both parties) will produce a deal that is bad news. At least for those of us who don’t want America to become Greece (any faster than already scheduled).

Republican and Democratic congressional aides have predicted for months that both sides will come together on a spending agreement to raise spending caps for the Pentagon as well as for nondefense domestic programs.

It’s depressing to see how Republicans are bungling the Obamacare issue. But it’s also understandable since it’s politically difficult to reduce handouts once people get hooked on the heroin of government dependency (a point I made even before Obamacare was enacted).

Unfortunately, I fear that the GOP might bungle the tax issue as well. I was interviewed the other day by Dana Loesch on this topic and highlighted several issues.

There are several ways to slice the data, so one can quibble with Brian’s assertion. But when comparing taxes paid by the rich compared to taxes paid by the poor, it is true that the United States relies more on upper-income taxpayers than any other developed nation. Not because we tax the rich more, but because we tax the poor less.

Politicians in Washington just reached a deal to fund the government for the rest of the current fiscal year. As reported by the Washington Post, it’s not exactly a victory for libertarians or small-government conservatives.

Democrats are surprised by just how many concessions they extracted in the trillion-dollar deal, considering that Republicans have unified control of government. …Non-defense domestic spending will go up, despite the Trump team’s insistence he wouldn’t let that happen. The president called for $18 billion in cuts. Instead, he’s going to sign a budget with lots of sweeteners that grow the size of government. …the NIH will get a $2 billion boost — on top of the huge increase it got last year. …Planned Parenthood…will continue to receive funding at current levels. …after the deal was reached…, Chuck Schumer and Nancy Pelosi quickly put out celebratory statements. …“Overall, the compromise resembles more of an Obama administration-era budget than a Trump one,” Bloomberg reports. …Reuters: “While Republicans control the House, Senate and White House, Democrats scored … significant victories in the deal.” …Vox: “Conservatives got almost nothing they wanted.”

I guess you could call this a triumph of “public choice” over campaign rhetoric. Politicians did what’s in the best interest of politicians rather than what would be best for the nation.

But here’s the catch. I don’t expect that these reforms will actually happen. Yes, the deck has been cleared, but I don’t think Republicans will take advantage of the opportunity.

The fundamental problem, which I pointed out in a different interview, is that there’s not a governing majority for smaller government. And that has some very grim implications.

Even more depressing, I point out that only Trump has the power to turn things around. Yet I see very little evidence that he, a) believes in smaller government, or b) is willing to expend any political capital to achieve smaller government.

To make matters worse, Republicans have convinced themselves that they lose the spin battle whenever there is a shutdown or some other high-stakes fiscal fight with Democrats.

For what it’s worth, I’m trying to remind Republicans that it is in their long-run political interests to do the right thing (as Reagan demonstrated). That’s why, in the first interview, I said they need to gut Obamacare and lower taxes if they want to do well in the 2018 and 2020 elections.

But don’t hold your breath waiting for the “stupid party” to behave intelligently.